Creating a Sales Tax Item

Remember, items are the pieces of information listed on sales and purchase forms, such as the goods you purchase. Sales tax is an item too, because it occupies a line on your sales forms. Before you can charge a customer sales tax, you have to set up the Sales Tax item, indicating the name of the tax, the taxing authority that ultimately receives the tax payment, and the rate at which tax is calculated. After all this is set up, charging sales tax becomes automatic.

Open the New Item window by selecting Lists, Item List, and then pressing Ctrl+N.

TIMESAVER

Click the Items & Services icon on the Home page to open the Item List.

Select Sales Tax Item as the item type.

Give your sales tax a name. "Sales Tax" is fine if there is only one tax and only one rate. If you pay tax at multiple rates or to different government offices, select a name that distinguishes this tax from the others.

Enter a description of the tax and, if applicable , to what it applies.

Enter the rate for this tax.

Select the name of the agency to which you pay the tax from the drop-down list. This agency is added to your vendor list. If the tax agency does not appear on the list, select Add New at the top of the drop-down list to enter the agency name.

Click OK to save your changes.